Global benchmark Brent was up 37 cents at $28.25.
Advertisement
“We continue to note crude oil’s recent tendency to correct oversold conditions with a sideways chop rather than upward retracements, a sign of intermediate-term weakness”.
Mercuria is one of the world’s five biggest independent oil traders alongside Vitol Group BV, Glencore Plc, Trafigura Pte Ltd. and Gunvor Group Ltd. The company was founded by former Goldman Sachs Group Inc. bankers Dunand and Daniel Jaeggi in 2004.
Global equities and crude oil prices began rebounding Thursday after the European Central Bank said there were “no limits” to the stimulus measures it might take to boost the eurozone economy.
The pessimism on oil prices, which once surpassed $145 a barrel in 2008, is mainly driven by the steady and high-pace production by oil producers who are unwilling to curb output.
That said, this week traders have bought a raft of derivatives that would give them the option to buy oil at $40 a barrel by the end of the year, suggesting that the worst of the rout may be over for now. Since then, the benchmark has rallied 14 percent to trade at $31.06 a barrel at 1:30 p.m.in London.
“Until we have priced in all the concerns about slowing economic growth, especially in China and the emerging countries, or we can see the signs of oversupply about to abate, the market still has room to move on the downside”.
“The fundamentals are still weak and you still have worries about economic growth and its impact on fuel demand, so this is probably a sign that things have been overdone more than anything else”, said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.
The Chicago Board Options Exchange Crude Oil Volatility Index, a gauge of anticipated volatility in US crude prices, jumped to 67.93 on Wednesday, the highest level since March 2009.
Brent futures for delivery in five years have dropped roughly $10 a barrel this year, compared with a drop of $8 a barrel for contracts for immediate delivery.
“Oil prices have deteriorated substantially in the past few weeks and have reached nominal price lows not seen in more than a decade”, Moody’s analysts said in a report. Trafigura doubled earnings from oil trading to a record $1.7 billion in 2015.
Advertisement
Markets may react later to the influx of an extra 500,000 barrels of oil per day from Iran, which could pressure a sector already flush with crude oil.
